Daily Sitka Sentinel

Sitka's Challenges: Aging Population, Housing

A pie chart shows Sitka’s changing demographics from 1980 to 2013. (graphic provided by SEDA)

By SHANNON HAUGLAND

Sentinel Staff Writer

Sitka’s aging population, housing that’s unaffordable for medium- and low-income families, and cutbacks in state-funded government services were identified as among Sitka’s most pressing problems at Thursday’s Sitka Economic Summit.

The Sitka Chamber of Commerce annual event led off with speakers from various sectors giving their own perspectives on the strengths and weaknesses of the economy. Sitka Economic Development Association director Garry White provided the broader picture of Sitka’s economy.

Speakers in the first 90 minutes identified problems, but several concluded on a note of optimism, whatever the state of their particular business or sector. Most of the short summaries were specific to the speaker’s particular business, rather than industry-wide.

Government officials highlighted the financial challenges facing the city, the School District and Sitka Community Hospital.

“This is the new norm,” City Administrator Mark Gorman said, quoting Sen. Bert Stedman. He said the city has faced three major economic challenges in the 38 years he has lived here: the Alaska Pulp Corp. mill closure, Sheldon Jackson College’s closure, and now the crash of oil prices and its effect on state finances.

He said the city will survive, but must be creative as it goes forward and not rely on help from state and federal sources. He said the city has to make choices about how to close its multimillion-dollar budget gap.

“I’m remaining optimistic about Sitka,” he said. “We’re going to have to be inventive and become more self-sufficient.” Gorman predicts Sitka’s demographic in the future will be “grayer” and more affluent, given the high cost of living in Sitka compared to income.

School Superintendent Mary Wegner talked about the school district’s problems: funding cuts from the state and federal governments; no growth in student population; and increasing fixed costs. But she also highlighted efforts to work in partnership with other organization in Sitka to reduce costs and broaden educational offerings.

She cited a cooperative project between the Sitka Conservation Society and Sitka High to build a “tiny house” in the new vocational wing, and other projects with Sitka Fine Arts Camp, Sitka Tribe of Alaska and Sitka Sound Science Center.

Hospital CEO Rob Allen, speaking after 90 days on the job, said the hospital is moving into its budget work sessions at the same time it is developing a strategic plan to turn its  finances around. He said this year is forecast to end $2 million in the red, but finances are stable now, thanks to a $1 million loan from the city.

“I’m feeling optimistic and confident Sitka Community Hospital will be here for the long term but it will look different from what it is now. The whole community has to be part of the process,” he said.

STA General Manager Lawrence SpottedBird reviewed some of the economic development ideas that will benefit the community as well as the tribe, including the start of a biotoxin testing lab, a sports equipment label in project and government technology contracts.

Travis Vaughan, owner of Baranof Realty, was the most upbeat of all the speakers, highlighting a banner year in real estate with home sales climbing from $15 million in 2013 to $25 million in 2014.

But it’s difficult for many in Sitka to afford to buy a home, he said, estimating that to afford a average price home here a family must have an income of $72,000, while the median household income is about $64,000.

“What can we do to help a working-class family get into their first home?” he asked. While some factors can’t be controlled, others can, such as changing the city’s zoning to allow for more housing options, and increasing the supply of land for building. “We need more housing options – we need to move more toward multifamily and away from single-family homes,” he added today. “Traditional single family homes – we don’t have the land for it.”

He also stressed the importance of taking advantage of economic development opportunities to keep the situation from getting worse. Using the cities of Corpus Christi and Austin, Texas, as examples, he said Corpus Christi was a town that always said no, whereas Austin found a way to make economic development ideas work.

“‘No’ got them nowhere,” Vaughan said. “Austin found a way to say yes.” He’s seen some bright points on the horizon in Sitka, he said, with the addition of accessory dwelling units as allowable uses in residential zones. But he said more could be done to make housing more affordable.

Tourism was a mixed picture, with the steady decline of the number of cruise ship visitors from a high of nearly 300,000 to last year’s 90,000, and a decline in ferry service. Forecasts are for a 28 percent increase in cruise ship visits this year, thanks to the addition of Sitka stops by Holland America Line, Norwegian Cruise Line and Celebrity Cruises, said Chris McGraw, manager of the Old Sitka Dock. He stressed the importance of getting the word out about Sitka as a good port to visit.

Alaska Airlines has had an increase in Sitka traffic over the past four years, SCVB director Tonia Rioux said, and the entry of Delta Airlines into the Sitka market this summer may increase the number of visitors, she said.

Roger Schmidt, director of the Sitka Fine Arts Camp, provided statistics on the economic contributions made by the camp, such as the jobs created by the summertime employment of camp instructors, and the boost to the economy by the hundreds of campers and college-age volunteers who come from all around Alaska and elsewhere. 

Economic Indicators

The final segment of the afternoon was a quick presentation from Garry White.

The SEDA director had to speed through his two dozen slides because the meeting was approaching the scheduled 5 p.m. closing time.

In his baseline indicators, he said Sitka’s population has grown from 8,810 in 2000-01 to 9,061 in 2013-14, and most of the increase in four years has been from births. He said there were 1,603 births in the years 2010 to 2014, compared to 782 deaths, for a net population gain of 570.

“This means the number of births exceeded the number of deaths by a large enough margin to make up for the significant net loss of 570 residents to out migration (since 2000),” White said.

The main change has been in the demographics of Sitka, he said. In 1990, 6 percent of the residents were 65 and older. In 2014, that number went up to 13.5 percent. The 40-60 age group in the same period also climbed from 25 percent to 35 percent.

At the same time, the 0 to 19 age group went from 33 to 25 percent, and 20-to-39 year old sector declined from 36 percent to 27 percent.

The school enrollment has declined from a high of 1,880 in 1993 (the year the mill closed) to the present fairly stable 1,300.

White said what he is seeing is the loss of workforce-age residents, and an aging population, which will affect housing and health care needs, as well as the city’s tax base, public services and retail purchasing.

New housing construction has declined since 2002, with 62 dwelling units added.

Estimates were between 12 and 20 new units per year in 2009 to 2014. The housing sales picture was a little different, with sales varying between 139 in 2002, to 60 in 2012 and back up to 110 in 2014, he said. Vacant lot sales have also varied greatly from a high of 77 in 2006 – about half from the Hillside subdivision – to a low of 12 in 2009, and 44 in 2014.

The unemployment picture has remained stable over the years, with the exception of a spike from the loss of 400 jobs when the APC mill closed in 1993 – unemployment hit 10 percent, well above the average of between 5 and 6 percent since 1990.

The average annual monthly workforce in Sitka has fluctuated from 4,449 to 4,741, with last year’s figure at 4,683. The number of private versus public sector jobs fluctuates throughout the year with the private sector climbing in the summer months, when more seasonal work is available.

Most of Sitka’s private sector jobs are in health and social services, which account for about 650 jobs. Next is manufacturing at 500 and retail trade and hospitality, at more than 400 for each sector.

One slide showed that most of the private payroll employment in the manufacturing sector is in the food sector, which includes seafood. The non-food sector accounts for about 11 percent.

Per capita income in Sitka lags behind both Ketchikan and Juneau although 2013 Sitka was close to both, probably from the dam project, White said.

One major change in the last 25 years has been in per capita personal income. In 1980, about 81 percent came from earnings versus other sources; in 2013 only 64 percent came from earnings.

White said the seafood industry, the visitor and travel industry, and the government sectors are Sitka’s “economic drivers,” bringing new income into town. 

The seafood industry is one of the largest in the nation, with Sitka ranking 9th for value and 16th for volume in the U.S. raw fish tax revenues – which goes mostly into the harbor fund with some going to the general fund –  have climbed significantly in recent years with the addition of Silver Bay Seafoods in 2007 and 2008.

Raw fish tax revenues were about $500,000 annually in the early 2000s, climbing to above $600,000 in 2006, and up to above $1.2 million in 2011 and 2012. White said other jobs have increased benefits to other sectors, including government, city government, transportation, hatcheries and marine industry.

In the tourism industry, cruise ship traffic has fluctuated over the years, with highs coming in 1996 (252,256) and 289,753 in 2008. A steady decline followed to a low of 89,635 in 2014. Last year’s 60,100 figure was the lowest since the early 1980s. City bed taxes fluctuated in the last 10 years between $244,841 and $426,939.

In the government sector, local government jobs have climbed over 10 years from 600 in 2004 to 673 in 2014, which includes the city, hospital and school district. Over the same time period, state jobs have held steady and federal government jobs have fallen by about 100, with U.S. Forest Service job cuts a factor. Federal government payroll totalled $6.7 million for a single quarter in 2004, and was $3.9 million for the same quarter in 2014.

“A net loss of federal government employees and their projected third quarter 2014 payroll, resulted in the loss of potential new money flowing into the local economy in the amount of $2,786,071,” White said on his slide. “That is JUST for the three months of July, August, and September 2014.”

At the end of his presentation, he identified areas of concern as:

– Population aging and loss of workforce-age residents.

– Shortage of affordable housing options for the workforce.

– The need for year-round jobs, since private industry employment increases are mostly seasonal.

– There is a need to sustain and maximize the use of the seafood resource and local benefits.

– Expected changes in air services in Southeast Alaska.

– The forecast for additional cuts in federal and state spending and employment in Sitka.

On a question about the forecast for bulk water sales at the Sawmill Cove Industrial Park, White said, “The partners suggest they are closer and closer to making this a reality.” He said an 18-acre tidelands lease at the industrial park for the water export business is in the works, along with a permit from the U.S. Corps of Engineers.

White said he had a meeting set for today with representatives from California who are involved in the enterprise.